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PROTON HOLDINGS BERHAD

CONTENTS

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Page EXECUTIVE SUMMARY vi PART A LETTER FROM THE BOARD OF PROTON 1. INTRODUCTION 1 2. BOARD’S COMMENTS 2 3. DIRECTORS’ INTENTION FOR THE OFFER 3 4. DETAILS OF ACCEPTANCES 3 5. DIRECTORS’ DISCLOSURE OF INTEREST 3 6. DIRECTORS’ RESPONSIBILITY STATEMENT 3 7. DIRECTORS’ RECOMMENDATION 4 PART B INDEPENDENT ADVICE LETTER FROM AFFIN INVESTMENT 1. INTRODUCTION 6 2. LIMITATIONS TO THE EVALUATION OF THE OFFER 7 3. SALIENT TERMS AND CONDITIONS OF THE OFFER 9 4. DETAILS OF ACCEPTANCES 10 5. EVALUATION OF THE OFFER 10 6. FURTHER INFORMATION 53 7. CONCLUSION AND RECOMMENDATION 53 APPENDICES I INFORMATION ON PROTON 57 II INFORMATION ON DRB-HICOM 67 III FURTHER INFORMATION 88

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EXECUTIVE SUMMARY OF THE OFFER (CONT’D)

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3. EVALUATION OF THE OFFER In arriving at the recommendations in respect of the Offer, the Board (save for Dato’ Sri Haji Mohd Khamil bin Jamil) has taken into consideration the evaluation by AFFIN Investment. AFFIN Investment has assessed and evaluated the terms of the Offer as set out in Section 5, Part B of this IAC. In arriving at its opinion on the Offer, AFFIN Investment has taken into consideration the following pertinent factors: (i) the rationale for the Offer as elaborated in Section 5.1 of the IAL; (ii) the financial performance of the PROTON Group as elaborated in Section 5.2 of the

IAL; (iii) the financial evaluation of the Offer as elaborated in Section 5.3 of the IAL; (iv) the listing status of PROTON and compulsory acquisition as elaborated in Section 5.4

of the IAL; (v) the Offeror’s future plans for the PROTON Group as elaborated in Section 5.5 of the

IAL; (vi) the overview of the Malaysian economy and the prospects of the automotive industry

in Malaysia as elaborated in Sections 5.6.1 and 5.6.2 of the IAL; and (vii) the future prospects of the PROTON Group as elaborated in Section 5.6.3 of the IAL.

4. RECOMMENDATION FROM THE INDEPENDENT ADVISER You should consider carefully, the quantitative and qualitative aspects of the Offer, including but not limited to the pertinent factors such as: (i) the Offeror’s future plans for the PROTON Group; (ii) the listing status of PROTON; and (iii) other considerations as set out in this IAC, the Offer Document and other publicly

available information, prior to making a decision on whether to accept or reject the Offer. AFFIN Investment, being the Independent Adviser, has assessed and evaluated the quantitative and qualitative aspects of the Offer to arrive at the fairness and reasonableness of the Offer as contained in the IAL, based on the pertinent factors as set out in Section 5, Part B of the IAL and the evaluation is summarized as follows: Fairness of the Offer (i) Market prices of PROTON Shares

AFFIN Investment noted that PROTON Shares had generally traded at a discount to the Offer Price for the past one (1) year up to the Last Trading Date. The Offer Price represents a premium ranging from 2.80% to 26.73% over the five (5)-day, one (1)-month and three (3)-month VWAMP of PROTON Shares up to and as at the Last Trading Date.

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The Offer Price represents a premium ranging from 71.34% to 94.35% over the twelve (12)-month, six (6)-month, three (3)-month, one (1)-month, five (5)-day VWAMP and the last transacted price of PROTON Shares up to and as at the Event Date. In this regard, the Offer Price is fair when compared against the historical market prices of PROTON Shares during the period under review.

(ii) Performance of PROTON Shares’ price against the FBMKLCI The price of PROTON Shares has generally recorded a lower return in terms of dividend income and share price appreciation for the Holders as compared to the FBMKLCI for the period from 13 January 2011 (being the date 1-year prior to the Last Trading Date) up to the Event Date. However, during the month of December 2011 up to the Last Trading Date, PROTON Shares’ price has recorded a higher return in terms of dividend and share price appreciation as compared to an investment made in the FBMKLCI for the said period. Notwithstanding the above which is due to the speculative interest in PROTON Shares arising from the news articles in November 2011 on a possible impending take-over of PROTON, we take note that based on the performance of the market prices of PROTON Shares against the FBMKLCI from 13 January 2011 (being the date 1-year prior to the Last Trading Date) up to the Event Date, an investment in PROTON Shares would have generated a higher loss in terms of dividend income and share price appreciation as compared to the losses from investing in FBMKLCI, which demonstrate that PROTON Shares have been generally underperforming vis-à-vis the FBMKLCI over the period under review. In this regard, Holders may consider accepting the Offer.

(iii) Trading liquidity It is noted that the analysis of the historical trading volume and the percentage free float of PROTON Shares would suggest that PROTON Shares was at a simple average monthly volume of approximately 10.79 million PROTON Shares or 5.68% of the free float of PROTON Shares for the period commencing from December 2010 up to November 2011, being the month of the Event Date. However, from November 2011 up to January 2012, the trading volume of PROTON Shares per month has increased substantially which is believed to reflect the speculative interest by investors in PROTON Shares following the release of news articles by the media in November 2011 and December 2011 on a possible impending take-over of PROTON.

(iv) PBR analysis Historically, the market has in the past one (1) year up to the Last Trading Date and Event Date valued PROTON Shares lower than the Offer Price based on the traded PBR. The Offer PBR of 0.56 times based on the NA per PROTON Share as at 31 March 2011 falls below the range of the PBR of the Comparable Companies of 0.78 times to 1.89 times and also falls below the average PBR of the Comparable Companies of 1.40 times. In this regard, PROTON is undervalued as compared to the Comparable Companies from the perspective of PBR analysis. However, we noted that PROTON has recorded a lower ROA and ROE for the FYE 31 March 2011 as compared to the Comparable Companies.

(v) PER analysis

Historically, the market has in the past one (1) year up to the Last Trading Date valued PROTON Shares higher than the Offer Price based on the traded PER. The Offer PER of 19.41 times based on the EPS of PROTON for the FYE 31 March 2011 is above the trailing PER range of the Comparable Companies of 6.84 times to 17.28 times and is also above the average PER of the Comparable Companies of 11.94 times. This indicates that the Offer Price is fair as compared to the average trading PER of the Comparable Companies.

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(vi) PROTON’s dividend track record and Dividend Discount Analysis We noted that the dividend yield of PROTON for the FYE 31 March 2011 of 2.82% is lower than the dividend yield of the FBM100 Index of 3.35% over the past 12 months. Nevertheless, we take note that the average dividend yield of PROTON for the past three (3) years of 3.41% falls within the range of the Comparable Companies of between 2.70% to 3.95%. However, when compared to the prevailing fixed deposit rate offered by a Malaysian financial institution that is available to PROTON shareholders, it is not attractive for PROTON’s shareholders to retain PROTON Shares for dividend income purposes. Notwithstanding the illustration above, Holders should take note that PROTON’s dividend yield may not be directly comparable to the rate of return from a bank fixed deposit account due to the different risk profiles and the fact that there may be capital gains from any appreciation in the market price of PROTON Shares that may be derived by Holders. Further, the Offer Price of RM5.50 is above the implied equity value of RM4.94 per PROTON Share based on the Dividend Discount Analysis valuation model.

Reasonableness of the Offer (i) Financial performance of the PROTON Group

We noted the financial performance of the PROTON Group over the past five (5) financial years as highlighted in Section 5.2.1, Part B of the IAC. It is noted that it would be beneficial for the Holders to accept the Offer as the PROTON may be faced with external challenges in the future as set out in Section 5.6.3, Part B of the IAC as well as the risk of the PROTON Group’s plans not being able to fully address these challenges.

(ii) Rationale of the Offer It is noted that given DRB-HICOM’s knowledge and experience in the automotive industry over the years, DRB-HICOM is expected to enhance PROTON’s system and procedures from its technical know-how in the automotive industry and its experience with other global automotive partners. In addition, the business synergies and opportunities for DRB-HICOM and PROTON can be expanded through the localisation and local vendor programmes. The intention of DRB-HICOM to safeguard the PROTON Group can be evidenced from the intention of its future plans as set out in Section 7 of the Offer Document. Notably, pursuant to the SSPA, DRB-HICOM has provided its covenants and undertakings that it will not engage in plans involving any disposal of assets of the PROTON Group which will result in a significant change in the business direction or policy of PROTON which includes the manufacture, assembly and sales of motor vehicles and related products, or constitutes a Major Disposal (as defined under Paragraph 10.02 (eA), Part B, Chapter 10 of the Listing Requirements) within 2 years from the completion date of the Acquisition. The Offer also provides an opportunity for the Holders to realise their investment in PROTON Shares for cash at the Offer Price, which is not less than the highest price paid by the Offeror for PROTON Shares during the 6 months period prior to the beginning of the Offer Period.

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Pursuant to Section 218(2) of the CMSA and Section 9(1), Part III of the Code, DRB-HICOM is obliged to extend a mandatory take-over offer for all the remaining PROTON Shares not already owned by DRB-HICOM after the Acquisition for a cash consideration of RM5.50 per Offer Share. Accordingly, on 14 March 2012, Maybank IB had, on behalf of DRB-HICOM, served the Notice on the Board. On 15 March 2012, PROTON announced the receipt of the Notice. A copy of the Notice was posted to you on 20 March 2012. In addition, you should also have by now received a copy of the Offer Document which was posted to you earlier on 4 April 2012, which sets out the terms and conditions of the Offer as well as the procedures for acceptance and method of settlement of the Offer. Pursuant to Part V, Section 15 of the Code, the Board had on 7 March 2012 appointed AFFIN Investment as the Independent Adviser to advise the Holders in relation to the Offer. On 13 April 2012, the SC had given its consent for the issuance of this IAC. However, this consent shall not be taken to imply that the SC agrees with the views and recommendation of your Board and AFFIN Investment contained herein. It merely means that this IAC has complied with the disclosure requirements under the Code. As at the LPD, DRB-HICOM directly holds 300,921,193 PROTON Shares, representing approximately 54.79% of the issued and paid-up share capital of PROTON. The details of the substantial shareholders of DRB-HICOM are disclosed in Section 3, Appendix II of this IAC.

2. BOARD’S COMMENTS 2.1. Rationale for the Offer

The Board (save for Dato’ Sri Haji Mohd Khamil bin Jamil) has taken cognisance of the rationale for the Acquisition and the Offer as set out in Section 3 of the Offer Document. The Board (save for Dato’ Sri Haji Mohd Khamil bin Jamil) noted that the Offer arises as a consequence of the Acquisition in view that DRB-HICOM’s direct shareholding in PROTON has increased from approximately 7.27% (after the Open Market Purchases) to approximately 50.01% after the Acquisition. Following the above, the Offer provides the Holders with an opportunity to realise their investments in PROTON in cash by selling their PROTON Shares to the Offeror at an Offer Price of RM5.50 per PROTON Share. The Board (save for Dato’ Sri Haji Mohd Khamil bin Jamil) wishes to bring your attention to Section 5.3.1, Part B of this IAC in relation to AFFIN Investment’s analysis on the historical share price performance of PROTON. Based on the foregoing, the Board (save for Dato’ Sri Haji Mohd Khamil bin Jamil) is of the view that the rationale for the Offer is reasonable after taking into consideration the independent view on the rationale for the Acquisition and the Offer made by AFFIN Investment which are set out in Section 5.1, Part B of this IAC.

2.2. The Offeror’s future plans for the PROTON Group As stated in Section 7 of the Offer Document, the Board (save for Dato’ Sri Haji Mohd Khamil bin Jamil) has taken note of the intentions of the Offeror, with respect to the future plans of the Offeror for the PROTON Group within the next twelve (12) months from the Closing Date.

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Comments:

We noted that one of the principal activities of DRB-HICOM Group is in the automotive sector which contributed approximately 59% of the DRB-HICOM Group’s revenue based on the latest audited financial statements for the FYE 31 March 2011.

DRB-HICOM has forged strategic partnerships with reputable and respected global brands such as Mercedes-Benz, Honda, Suzuki, Mitsubishi, Isuzu, Mahindra, Audi and Volkswagen. For example, DRB-HICOM is the distributor of Audi, Mitsubishi, Suzuki and Mahindra vehicles in Malaysia. It also has approximately 34% and 40% equity interest in Honda Malaysia Sdn Bhd and Suzuki Malaysia Automobile Sdn Bhd respectively, which are involved in assembly, manufacture and sale of Honda and Suzuki motor vehicles in Malaysia respectively. Further, DRB-HICOM is also involved in the assembly of vehicles for, amongst others, Mercedes-Benz and Volkswagen at its own assembly plant in Pekan, Pahang.

We also noted that DRB-HICOM has equity interests in original equipment manufacturer (“OEM”) companies such as HICOM-Teck See Manufacturing Malaysia Sdn Bhd, Oriental Summit Industries Sdn Bhd, Continental Automotive Instruments (Malaysia) Sdn Bhd, TRW Steering & Suspension (Malaysia) Sdn Bhd and Johnson Control Manufacturing Sdn Bhd which also supply automotive parts and components to PROTON Group. In addition, DRB-HICOM and PROTON also have common interests in PHN Industry Sdn Bhd of 62.50% and 35% respectively and PROTON Parts Centre Sdn Bhd of 45% and 55% respectively. DRB-HICOM through Edaran Otomobil Nasional Berhad also markets PROTON’s vehicles.

(Source: Annual report of DRB-HICOM for the FYE 31 March 2011)

These strategic alliances in the form of joint ventures, collaborations and partnerships with global automotive players would have provided DRB-HICOM with the relevant knowledge and experience in the automotive industry. This augurs well for DRB-HICOM to assist PROTON to strengthen its operations, manufacturing system and distribution network in the regional market.

The strategic alliances with the global automotive players above may also provide opportunities for DRB-HICOM to spearhead a multi-benefit Vendor Development Programme (“VDP”) in terms of quality, delivery and cost requirements.

The VDP refers to the development of small and medium sized local manufacturers and suppliers of automotive components, such as spare parts and other equipments required by larger automotive corporations including car manufacturers. The VDP also includes collaborations with other global automotive players which will result in both parties being able to compete effectively in the domestic and foreign markets through increased technical capabilities, quality, delivery and cost-effectiveness of their products.

In this regard, DRB-HICOM may take the opportunity to share with PROTON the relevant knowledge and technical know-how in the localisation and VDPs gained from its past dealings experience with other global automotive players.

DRB-HICOM’s interest in the OEM companies and the common interests in the above mentioned companies with PROTON may also create business synergies and opportunities for both DRB-HICOM and PROTON to expand the localisation and VDP in terms of quality, delivery and cost requirements.

The intention of DRB-HICOM to safeguard the PROTON Group is evident from its future plans as set out in Section 7 of the Offer Document. Notably, pursuant to the SSPA, DRB-HICOM has provided its covenants and undertakings that it will not engage in plans involving any disposal of assets of the PROTON Group which will result in a significant change in the business direction or policy of PROTON which includes the manufacture, assembly, and sales of motor vehicles and related products, or constitutes a Major Disposal (as defined under Paragraph 10.02 (eA), Part B, Chapter 10 of the Listing Requirements) within 2 years from the completion date of the Acquisition.

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(v) Unaudited 9-month FPE 31 December 2011 compared to unaudited 9-month FPE 31 December 2010

For the unaudited 9-month FPE 31 December 2011, the PROTON Group recorded revenue of approximately RM5.93 billion as compared to approximately RM6.36 billion in the corresponding period for the 9-month FPE 31 December 2010, representing a decrease of approximately 6.76%. Consequently, the PROTON Group recorded a LBT of approximately RM36.53 million as compared to the PBT of approximately RM134.37 million in the previous corresponding period for the 9-month FPE 31 December 2010. This was largely attributable to the lower revenue recorded from domestic sales. However, the unfavourable impact from the lower revenue was cushioned by a decrease in manufacturing and administrative overheads as well as the lower R&D expenses incurred during the FPE 31 December 2011.

5.2.2 The diagram below represents the revenue and number of vehicles sold from the FYE 31 March 2007 to 31 March 2011 and its unaudited financial statements for the 9-month FPE 31 December 2010 as well as the latest unaudited financial statements for the 9-month FPE 31 December 2011:

Comments:

The diagram above indicates that the revenue of the PROTON Group has been growing progressively over the past five (5) financial years under review from approximately RM4.69 billion in the FYE 31 March 2007 to approximately RM8.97 billion in the FYE 31 March 2011 representing a CAGR of approximately 13.86%. The progressive increase in the revenue was mainly due to the increase in the number of cars sold from 111,813 units of cars to 190,855 units of cars over the past five (5) years under review representing a CAGR of 11.29%. However, the PROTON Group’s PBT and PAT over the past five (5) years under review produced a negative CAGR of approximately -1.81% and approximately -1.77% respectively. As such, it can be observed that the PROTON Group is generating negative returns from its operations during the period under review.

We noted that the revenue of the PROTON Group has been increasing throughout the financial years under review. The reasons attributable to the increase in revenue based on the respective financial years are as follows:

-

50,000

100,000

150,000

200,000

250,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2007 2008 2009 2010 2011 Cumulative 3rd Quarter 31

December 2010

Cumulative 3rd Quarter 31

December 2011

Revenue No. of vehicles sold

FYE/FPE

Rev

enue

(RM

'mill

ion)

No. of V

ehiclesS

old

4,687

5,622

6,519

8,227

8,970

5,929

REVENUE & NO. OF VEHICLES SOLD

156,845

174,481190,855

122,370139,728

111,813

6,363

135,041

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FYE 31 March Reasons

2008 The introduction of the Persona model in August 2007. The introduction of the Saga model in January 2008 and the increase

in sales for Gen.2 model. The launch of the improved Waja CPS model and the Gen.2 facelift in

February and March 2008 respectively. 2009 The launch of the Persona facelift and the increase in sales of Saga

model. The launch of the Satria Neo facelift model.

2010 The introduction of the Exora model and the facelift of the Persona model in April 2010 and March 2010 respectively.

2011 The introduction of the Inspira model in November 2010. Based on the revenue trend analysis above, we noted that PROTON’s revenue sustainability appears to rely on the introduction of new car models as well as face lifted versions of existing models.

5.2.3 The diagram below represents the (LBITDA)/EBITDA, (LAT)/PAT and net (LPS)/EPS of the PROTON Group from the FYE 31 March 2007 to 31 March 2011 and its unaudited financial statements for the 9-month FPE 31 December 2010 as well as the latest unaudited financial statements for the 9-month FPE 31 December 2011:

Although the revenue of the Proton Group has increased steadily, the earnings of the Proton Group is erratic as illustrated in the diagram above. We noted that the PROTON Group recorded a LBITDA for the FYE 31 March 2007 of approximately RM243 million which was mainly due to intense competition from other marques in terms of year-end discounts to clear the unsold stocks of vehicles for the year 2006. This affected the sales and registration of new PROTON vehicles and its consequential market share. In addition, provision for claims in respect of prior years’ project development costs, higher component costs, additional expenditure required for promotions and higher cost of raw materials also contributed to losses for the FYE 2007. The lower EBITDA for the FYE 31 March 2009 of approximately RM174 million was mainly due to increase in cost of sales such as higher commodity prices, increased costs of components and raw materials which arose from higher foreign currency exchange rates (particularly, the Japanese Yen and the USD) coupled with allowance for doubtful debts.

-120

-100

-80

-60

-40

-20

0

20

40

60

-800

-600

-400

-200

0

200

400

600

800

1,000

(LBITDA)/EBITDA (LAT)/PAT Net (LPS)/EPS (sen)

(RM

'mill

ion)

(Sen)

20082007 2009 2010 2011

Cumulative3rd Quarter

31 December 2011

(243)

(590)

548

185 174

(302)

790

219

735

156

362

(68)

EARNINGS

(107.34)

33.60

(54.95)

39.86

28.33

(12.40)

91

491

16.50

Cumulative3rd Quarter

31 December 2010

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Comments

Based on the analysis above, we noted that the fluctuation in the EBITDA or LBITDA recorded by the PROTON Group was mainly due to the cost of components and raw materials. The profitability of the PROTON Group was mainly affected by the impairment of property, plant, equipment and inventory as well as the accelerated amortization of dies and jigs due to the discontinuance of production or lower actual production of certain models as compared to the initially projected production.

5.2.4 The diagram below illustrates the cash and cash equivalents and the total borrowings of the PROTON Group as at 31 March 2007 up to 31 December 2011:

Based on the diagram above, we noted that the trend of the deposits, bank and cash balances of the PROTON Group has been inconsistent for the past five (5) financial years under review. In particular, we noted a sharp increase of approximately RM600 million of deposits, bank and cash balances from 31 March 2007 to 31 March 2008 mainly due to the cash flows generated from operations driven from the sale of the new Saga and Persona models.

This was followed by a further increase in the deposits, bank and cash balances of PROTON Group to approximately RM1.65 billion as at 31 March 2010 due to the continuous increase in sales of vehicles in particular, the Saga and Persona facelift models.

On the other hand, we observed that the deposits, bank and cash balances of PROTON Group have decreased from RM1.65 billion as at 31 March 2010 to RM1.18 billion as at 31 December 2011 due to high capital expenditures incurred for the development of the new model Prevé as well as Group Lotus’s operational expenses and capital expenditures.

We also noted a substantial increase in the borrowings of the PROTON Group as at 31 December 2011. The substantial increase in borrowings was due to the restructuring expenses incurred by Group Lotus as part of its turnaround business plan. The borrowings consist of a syndicated loan of GBP270 million, which was obtained by LCL, of which approximately GBP207.25 million (equivalent to approximately RM1.02 billion based on the exchange rate of GBP1.00:RM4.9035 as of 31 December 2011) has been drawn down for the following purposes:

(a) to introduce the future range of new models which initially included five (5) models, namely Esprit, Elise, Elite, Eterne and Ethos;

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Cash & Cash Equivalent Borrowings

(RM

'mill

ion)

2007 2008 2009 2010 2011 Cumulative 3rd Quarter

31 December 2011

626

1,226

914

1,652

1,293

1,181

346 344408

231

399

1,145

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(b) to engage in R&D activities for the new bespoke engine in order to re-brand and enhance the desirability of Lotus’ products;

(c) to upgrade and expand the factory in Hethel, Norwich, in order to cater for future business requirements; and

(d) to consolidate and optimize the dealer network. The repayment of the syndicated loan obtained by LCL is on nine (9) quarterly installments commencing from 31 March 2015. The final maturity date is up to six (6) years from the first drawdown. We have also noted that the audited borrowings of the PROTON Group as at 31 March 2011 comprises short term borrowings which amounted to approximately RM361 million and long term borrowing which amounted to approximately RM38 million. However, based on the 9-month unaudited consolidated statements of financial position as at 31 December 2011, the PROTON Group recorded a total short term borrowings of approximately RM1.145 billion due to the re-classification of the syndicated loan obtained by LCL amounting to approximately GBP207.25 (equivalent to approximately RM1.02 billion based on the exchange rate of GBP1.00:RM4.9035 as of 31 December 2011) from long term to short term. This means LCL is required to repay the syndicated loan within the next twelve (12) months subsequent to 31 December 2011. The said reclassification of the above long term loan to short term loan as required under the financial reporting standards FRS101 and FRS 110 is due to LCL not fulfilling certain post-drawdown conditions pertaining to the syndicated loan. LCL had subsequently appealed to the lenders of the syndicated loan for an extension of time to fulfill the abovementioned post-drawdown conditions. On 1 March 2012, the lenders have agreed to extend the timeframe for LCL to fulfill the said conditions up to 30 June 2012. Pursuant thereto, as at the LPD, the management of PROTON has represented to us that the syndicated loan of LCL is expected to be reclassified from short term borrowings to long term borrowings for the balance sheet of the PROTON Group as at 31 March 2012. Comments Based on the analysis above, we noted that in general the PROTON Group’s cash position increased after the introduction of its new or facelifted models which was well accepted by consumers which is in inline with the increase in the revenue. Nevertheless, the PROTON Group’s cash position decreased mainly due to the expenses incurred for R&D activities or product development costs for new models. The product development costs/R&D activities are either funded from internally generated funds or borrowings.

After taking into consideration the financial performance of the PROTON Group over the past five (5) financial years from the FYE 31 March 2007 to FYE 31 March 2011 and the unaudited financial statements of the PROTON Group for the 9-month FPE 31 December 2011 as highlighted above, we are of the view that it would be beneficial for the Holders to accept the Offer as the PROTON Group may be faced with external challenges in the future as set out in Section 5.6.3 of this IAL as well as the risk of the PROTON Group’s plans not being able to fully address these challenges.

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No. Date Events

12. 17 November 2011 The release of the newspaper article by the media in relation to a possible take-over of PROTON.

13. 29 November 2011 Announcement of the Second Quarter – FYE 30 September 2011 results.

14. 5 December 2011 – 6 December 2011

Bursa query on unusual market activity in relation to PROTON Shares on 5 December 2011.

The release of the newspaper article by the media entitled “Khazanah to invite bids for PROTON”.

Trading halt of PROTON Shares from 10.20 am, 6 December 2011 until 11.20 am, 6 December 2011.

15. 13 December 2011 Announcement on the news paper article entitled “DRB-HICOM to buy into PROTON” dated 12 December 2011.

Announcement on the news paper article entitled “Khazanah selling PROTON stake to DRB-HICOM” dated 12 December 2011.

16. 5 January 2012 The release of the newspaper article by the media in relation to possible acquisition by General Motors Corporations of a stake in PROTON’s Tanjung Malim plant.

The release of the newspaper article by the media in relation to a bid made by Dato’ Sri Mohd Nadzmi bin Mohd Salleh for KNB’s 42.7% stake in PROTON.

(Source: Announcements from Bursa Securities’ website and other publicly available information)

Based on the movement in the closing market price of PROTON for the past one (1) year to up to the Last Trading Date, the market share price of PROTON Shares had generally traded below the Offer Price. PROTON recorded a highest transacted share price of RM5.46 on 12 January 2012 and a lowest transacted share price of RM2.57 on 18 October 2011, while the average share price for the above said period was RM3.47.

A comparison of the Offer Price against the historical closing market price of PROTON Shares and the respective VWAMP up to the Last Trading Date is as follows:

PROTONShare Price

OfferPrice

Premium of the Offer Price

RM RM RM % Last transacted price as at the Last Trading Date

5.18 5.50 0.32 6.18

Five (5)-day VWAMP up to the Last Trading Date

5.35 5.50 0.15 2.80

One (1)-month VWAMP up to the Last Trading Date

4.88 5.50 0.62 12.70

Three (3)-month VWAMP up to the Last Trading Date

4.34 5.50 1.16 26.73

Six (6)-month VWAMP up to the Last Trading Date

4.27 5.50 1.23 28.81

12-month VWAMP up to the Last Trading Date

4.19 5.50 1.31 31.26

Last transacted price as at the LPD 5.47 5.50 0.03 0.55 Five (5)-day VWAMP up to the LPD 5.48 5.50 0.02 0.36

(Source: Bloomberg)

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Based on the table above, we noted that the Offer Price represents a premium of 31.26%, 28.81%, 26.73% and 12.70% over the twelve (12)-month, six (6)-month, three (3)-month and one (1)-month VWAMP of PROTON Shares respectively up to the Last Trading Date. We also noted that the premium for the five (5)-day VWAMP and the last transacted price as at the Last Trading Date of 2.80% and 6.18% respectively represents a lower premium to the Offer Price. Based on the analysis above, we noted that the premium offered in the Offer Price over the range of VWAMP above has been decreasing progressively due to the surge in the trading volume and market price of PROTON Shares beginning from the month of November 2011. This could be possibly due to the news articles pertaining to a possible take-over of PROTON reported by the media in November 2011 and December 2011. As such, we have compared the relevant Offer Price against the historical closing market price of PROTON Shares and the respective VWAMP up to the Event Date are as follows:

PROTON Share Price

Offer Price

Premium of the Offer Price

RM RM RM % Last transacted price as at the Event Date

3.21 5.50 2.29 71.34

Five (5)-day VWAMP up to the Event Date

2.96 5.50 2.54 85.81

One (1)-month VWAMP up to the Event Date

2.85 5.50 2.65 92.98

Three (3)-month VWAMP up to the Event Date

2.83 5.50 2.67 94.35

Six (6)-month VWAMP up to the Event Date

2.97 5.50 2.53 85.19

12-month VWAMP up to the Event Date

3.09 5.50 2.41 77.99

(Source: Bloomberg) Based on the analysis above, we noted the Offer Price represents a premium ranging from 71.34% to 94.35% or RM2.29 to RM2.67 over the twelve (12)-month, six (6)-month, three (3)-month, one (1)-month, five (5)-day VWAMP up to the Event Date and the last transacted price of PROTON Shares as at the Event Date. This illustrates that the Offer Price represents a substantial premium to the historical market price of PROTON Shares up to the Event Date. In this regard, we are of the view that the Offer Price is fair when compared against the historical market prices of PROTON Shares during the period under review above. We wish to highlight that the above evaluation has been based on the historical market prices and trading volumes of PROTON Shares as at the respective dates and periods and it should not be relied upon as an indication of the future trading performance of PROTON Shares. Holders should also take note that based on the historical market prices of PROTON Shares, there is no assurance that the market price of PROTON Shares will remain at the current level after the close of the Offer.

20

21

Holders should monitor carefully the market prices of PROTON Shares before arriving at a decision whether to accept or reject the Offer. Holders should take into consideration other evaluation in this IAL in arriving at the decision to accept or reject the Offer.

(b) Performance of PROTON Shares’ price against the FBMKLCI The movement of market prices of PROTON Shares against the FBMKLCI for the past one (1) year prior to the Last Trading Date is shown in the chart below:

(Source: Bloomberg) Based on the chart above, we noted that PROTON Shares have generally recorded a lower return in terms of dividend income and share price appreciation for the holder of PROTON Shares as compared to the FBMKLCI. However, during the month of December 2011 up to the Last Trading Date, PROTON Shares have recorded a higher return in terms of dividend and share price appreciation as compared to the return of the FBMKLCI. Based on this observation, it appears that an investment in PROTON Shares generates a higher return in terms of share price appreciation as compared to an investment made in the FBMKLCI for the said period. However, we wish to highlight that the higher return generated from PROTON Shares during the month of December 2011 up to the Last Trading Date could possibly reflect the speculative interest by investors in PROTON Shares following the release of news articles by the media in November 2011 and December 2011 on a possible take-over of PROTON which has resulted in the speculation of PROTON Shares leading to higher share prices and higher volume traded. As such, we have compared the movement of market prices of PROTON Shares against the FBMKLCI from 13 January 2011 (being the date 1-year prior to the Last Trading Date) up to the Event Date as shown in the chart below:

(Source: Bloomberg)

FBMKLCI

PROTON Shares

FBMKLCI

PROTON Shares

21

23

Based on the one (1) year period up to the Last Trading Date, the average monthly trading volume was approximately 33.56 million PROTON Shares per month representing approximately 17.66% of the free float of PROTON Shares. However, based on the one (1) year period including and prior to November 2011, the average monthly trading volume was approximately 10.79 million PROTON Shares per month representing approximately 5.68% of the free float of PROTON Shares. The above analysis of historical trading volume and the percentage free float would suggest that the trading of PROTON Shares was relatively illiquid during the month from December 2010 up to October 2011. However, for the 3 months commencing from the month of November 2011 up to January 2012, the trading volume of PROTON Shares per month has increased dramatically to approximately 42.42 million PROTON Shares, 163.33 million PROTON Shares and 139.82 million PROTON Shares for November 2011, December 2011 and January 2012 respectively which were significantly higher than the average monthly trading volume. We believe this reflects the speculative interest by investors in PROTON Shares following the release of news articles by the media in November 2011 and December 2011 on a possible take-over of PROTON. Notwithstanding the above, it is pertinent to note that, as at the LPD, DRB-HICOM currently holds approximately 54.79% of the total issued and paid-up share capital of PROTON. DRB-HICOM may possibly accumulate a higher holding of PROTON Shares as a result of acceptances received pursuant to the Offer. Holders should take note that the trading liquidity of PROTON Shares may be adversely affected pursuant to the Offer as the shareholding of the Offeror may increase as a result of acceptances received pursuant to the Offer. Should there be a decline in liquidity, the ability of the Holders to realise their investment in the open market in the future may be impacted, especially if the Holders intend to dispose a sizeable amount of PROTON Shares.

5.3.2 NA PBR is a valuation method used in the valuation of companies by comparing the company’s market value to its book value. A PBR of less than one (1) time would mean that the market value accorded to the company is less than the NA attributable to the equity investors of the company and may therefore indicate that the company is undervalued. It may be useful to compare the Offer PBR against the historical PBR of PROTON to gauge the level of premium accorded to PROTON Shares by the Offer relative to PROTON’s historical book value. Based on the audited consolidated financial statements as at 31 March 2011, the major components of the Group’s assets are property, plant and equipment, inventories and deposits, bank and cash balances which represents approximately 33%, 16% and 17% respectively or approximately 66% of the total assets.

[The rest of this page is intentionally left blank]

23

0.00 0.50 1.00 1.50 2.00

UMW

Tan Chong

MBM

Proton

PBR

Average: 1.40 times

0.56x

0.78x

1.53x

1.89x

PBR (times)0.00 5.00 10.00 15.00 20.00 25.00

UMW

Tan Chong

MBM

Proton

12-MONTH TRAILING PER

19.41x

6.84x

11.70x

17.28x

PER (times)

Average: 11.94 times

28

the Offer PBR is also falls below the average PBR of the Comparable Companies of 1.40 times.

This indicates that based on the Offer PBR, PROTON is undervalued as compared to the Comparable Companies from the perspective of PBR analysis. We are of the view that the above PBR analysis should not be the primary method to assess the valuation of PROTON Shares given that the assets based method may not provide a representative valuation of PROTON in light of the capacity utilisation rate of PROTON’s manufacturing facilities and the ROA analysis as set out below. Based on the number of vehicles sold by the PROTON Group for the FYE 31 March 2011 of 190,855 units, the utilisation rate for its manufacturing plants was approximately 53% of its total annual vehicle production capacity of 360,000 vehicles. Notwithstanding the above, in order to gauge the efficiency of the PROTON Group in utilising its assets relative to the Comparable Companies, we have considered the ROA of PROTON as compared to the Comparable Companies. ROA is computed by dividing PAT over total assets. ROA is an indicator of how profitable a company is, relative to its total assets. In addition to ROA, we have also considered ROE. ROE is an indicator of how profitable a company is, relative to its shareholders’ equity (or net assets). ROE measures a company’s profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is computed by dividing PAT over shareholders’ funds. The table below provides the comparison of the ROA and ROE of the PROTON Group relative to the Comparable Companies:

Comparable Companies ROA(a) ROE(a)

% % MBM 10.55 13.96 Tan Chong 8.28 13.52 UMW 5.26 13.08

High 10.55 13.96 Low 5.26 13.08

Average 8.03 13.52 PROTON 2.03 2.88

Note: (a) Calculated based on the latest audited financial statements of the respective companies.

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%

UMW

Tan Chong

MBM

Proton

ROA

Average: 8.03%

2.03%

10.55%

8.28%

5.26%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

UMW

Tan Chong

MBM

Proton

ROE

Average: 13.52%

13.08%

13.52%

13.96%

2.88%

29

32

5.3.6 Dividend Discount Analysis The Dividend Discount Analysis model is used as the method to value PROTON Shares based on the finance theory that the equity value of PROTON is the sum of the present value of future cash flows to PROTON shareholders, being the dividend payment projected to be received by shareholders of PROTON in the future. This valuation methodology takes into consideration the yields on the business assets of the PROTON Group and its cost of capital. We wish to highlight that this analysis is very sensitive to the assumptions applied in the valuation. The Dividend Discount Analysis model takes into consideration the business plans and financial projections of the PROTON Group, including key assumptions and operating data of the PROTON Group and other relevant information provided by PROTON, as well as our discussions with the management of PROTON. The Dividend Discount Analysis model is based on the projected dividends expected to be paid from the projected PAT of PROTON Group for FYE 31 March 2013 to 2017. The projected PAT of Proton Group for FYE 31 March 2013 to 2017 was derived from financial projections contained in the five (5) year PROTON Group’s business plan and Group Lotus turnaround business plan provided to us by the management of PROTON and endorsed by the Non-Interested Directors which have been reasonably prepared on the basis that it reflects the best currently available estimates and judgement known to PROTON. Holders should take note that the profit forecast and projections for FYE 31 March 2013 to 2017 was based on the PROTON management’s estimates on a best effort basis but has not been independently verified by any professional advisers. The Non-Interested Directors of PROTON are responsible for the assumptions used in the preparation and presentation of the profit forecast and projections. The profit forecast and projections has been prepared based on the achievement of certain economic, operating and sales assumptions based on future events and actions that have not occurred and that may not necessarily occur. There is a considerable degree of subjective judgment involved in the preparation of the profit forecast and projections. The actual results may vary materially from the profit forecast and projections and the variation may be positive or negative. We noted the fluctuation of profit, dividend payout and level of cash of the PROTON Group over the past five (5) years when we arrive at the indicative valuation of the equity interest in PROTON using the Dividend Discount Analysis model. Nevertheless, as at the LPD, the Offeror holds approximately 54.79% controlling equity interest in PROTON. As such, the return on investment for the remaining non-controlling shareholders of PROTON will be mainly in the form of dividend payout. In this regard, the implied equity value derived from the Dividend Discount Analysis may be useful to compare with the Offer Price. We also noted that over the past five (5) FYE up to 31 March 2011, PROTON had declared dividends ranging from RM0.05 to RM0.20 per PROTON Share. A summary of the key assumptions that were used (as adopted by the Non-Interested Directors) to derive the profit forecast for the FYE 31 March 2013 to 2017 are as follows: (a) Forecasted domestic and export sales of number of vehicles of

PROTON Group

FYE 31 March 2013 2014 2015 2016 2017

Number of vehicles

185,495 261,316 362,930 409,167 400,056

32

33

(b) Projected capital expenditure of the PROTON Group

FYE 31 March 2013 2014 2015 2016 2017

RM’ million RM’ million RM’million RM’million RM’million Projected capital expenditure

1,549 1,050 1,099 869 844

(c) Existing and future financing facilities (as projected) will remain available to

the PROTON Group.

(d) There will be no material increase in wages, costs of production, utilities and other costs.

(e) All debt servicing and repayment shall be paid in accordance with the terms of the debt facilities.

(f) There will be no significant changes in the principal activities and the existing structure of the PROTON Group.

(g) There will be no major breakdown in the PROTON Group’s facilities or any other abnormal circumstances, which will adversely affect the operations of the PROTON Group.

(Source: Management of PROTON) Premised on PROTON continuing with its current operations and being able to implement its business plans as highlighted in Section 5.6.3 for the next five (5) years period commencing from the FYE 31 March 2013 up to 2017, we have adopted the following assumptions in arriving at the indicative valuation of the equity interest in PROTON: Parameters Assumptions Taxation Assuming the effective tax rate is at 25% per annum for the

FYE 31 March 2013 up to 2017.

Dividend payout ratio Assuming 30% of the PAT for the FYE 31 March 2013 up to 2017 is to be declared as dividend.

Dividend growth rate Assuming dividend growth rate of 3% per annum for the future dividend payout (based on the latest inflation rate of Malaysia of 3% per annum as at December 2011) (Source: www.statistics.gov.my)

Discount rate / Cost of equity 12.84% after taking into consideration of the following: (i) risk free rate of 3.67% based on the 10-year Malaysian

Government Bond yields (Source: Bloomberg); (ii) equity risk premium of 8.17% (Source: Bloomberg); (iii) beta of PROTON of 1.03 based on the movement

comparison of PROTON Shares price and FBMKLCI for the 3-year period commencing from 16 November 2008 up to the Event Date (as extracted from Bloomberg);

(iv) expected market return of 11.60% (Source: Bloomberg); and

(v) additional premium of 1% applied to the cost of equity of PROTON of 11.84%. In view of the risk arising from the uncertainties associated to the successful implementation of the business plans for PROTON and Group Lotus, we deemed this additional premium of 1% is appropriate.

33

34

Parameters Assumptions Cash balance of the PROTON Group

Assuming that dividends are only projected to be declared by PROTON provided that the PROTON Group has a cash balance of at least RM1.0 billion as at the projected balance sheet dates to finance the investment projects, capital expenditure and working capital requirements of the PROTON Group.

Comments The profit forecast for FYE 31 March 2013 to 2017 has been prepared solely for the PROTON Group’s 5 year business plan and Group Lotus’ 5 year turnaround business plan presented to us in connection with the Offer. We have also taken into consideration the challenges potentially impacting the future prospects of the PROTON Group as highlighted in Section 5.6.3 whereby the future financial performance of the PROTON Group which will be subject to the successful implementation of the abovementioned business plans. Based on our discussions with the management of PROTON, nothing has come to our attention which causes us to believe that the assumptions adopted by PROTON in the preparation of the profit forecast and projections for the FYE 31 March 2013 to 2017 do not provide a reasonable basis for the preparation of the said profit forecast. We wish to highlight that there may be events or circumstances occurring subsequent to the LPD that differ from the assumptions adopted and this may have a material impact on the value of PROTON Shares. Based on the Dividend Discount Analysis valuation model, the implied equity value per PROTON Share is RM4.94. The Offer Price of RM5.50 represents a premium of RM0.56 or approximately 11.34% over the implied equity value per PROTON Share of RM4.94. We wish to highlight that the implied equity value per PROTON Share of RM4.94 is based on the assumption that the business plans as described in Section 5.6.3 are successfully implemented and achieves the desired results. In addition, the said implied equity value per PROTON Share derived from the Dividend Discount Analysis valuation model is based on the assumption that the current operations and activities of the PROTON Group will continue as a going concern. Premised on the above, the Offer Price is deemed fair as it is above the implied equity value of RM4.94 per PROTON Share.


34

35

5.3.

7 A

naly

sis

of P

rece

dent

Tra

nsac

tion

Prem

ium

s In

eva

luat

ing

the

Offe

r Pric

e of

RM

5.50

for e

ach

Offe

r Sha

re, w

e ha

ve c

ompa

red

the

prem

ium

repr

esen

ted

by th

e pr

eced

ent t

ake-

over

offe

rs

trans

actio

ns a

nnou

nced

ove

r th

e pa

st o

ne (

1) y

ear

prio

r to

the

Ann

ounc

emen

t Dat

e, in

volv

ing

take

-ove

r of

fers

with

offe

r pr

ices

pai

d in

the

form

of c

ash

and

with

the

inte

ntio

n no

t to

the

mai

ntai

n lis

ting

stat

us o

f the

targ

et c

ompa

nies

(exc

ludi

ng ta

rget

com

pani

es w

hich

are

affe

cted

lis

ted

issu

ers

purs

uant

to th

e Li

stin

g R

equi

rem

ents

) as

follo

ws:

N

o.

Dat

e of

an

noun

cem

ent

Offe

ree

com

pany

O

ffer

pric

e

Prem

ium

to 5

-day

VW

AM

P pr

ior t

o th

e da

te o

f an

noun

cem

ent

Prem

ium

to 1

-m

onth

VW

AM

P pr

ior t

o th

e da

te o

f an

noun

cem

ent

Prem

ium

to 3

-m

onth

VW

AM

P pr

ior t

o th

e da

te o

f an

noun

cem

ent

Con

ditio

nal(a

) (In

tent

ion

not t

o m

aint

ain

listin

g st

atus

) R

M

RM

%

R

M

%

RM

%

1.

15

.06.

2011

H

PI R

esou

rces

Ber

had

4.40

0.

72

19.5

7 0.

87

24.6

5 1.

06

31.7

4 2.

09

.08.

2011

R

anhi

ll Be

rhad

0.

90

0.16

21

.62

0.17

23

.30

0.19

26

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3.

16.0

8.20

11

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ora

Berh

ad

3.00

1.

01

50.7

5*

0.60

25

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0.64

27

.12

4.

05.0

9.20

11

DXN

Hol

ding

s Be

rhad

1.

75

0.36

25

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0.43

32

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0.43

32

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11

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bee

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es B

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d 1.

00

0.17

20

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3 27

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6.

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tako

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ding

s Be

rhad

0.

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14

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29

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7.

27.0

1.20

12

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den

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tier B

erha

d 1.

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0.27

3 22

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4 27

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2 31

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8.

09.0

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ajay

a B

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d 0.

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16

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ge

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ge

14

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to 5

0.75

%

16.4

4% to

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16

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to 3

9.86

%

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ondi

tiona

l(b) (I

nten

tion

not t

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ain

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)

9.

11.0

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jaya

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ail B

hd

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0.

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5 10

. 29

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2011

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erge

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sing

Bhd

0.

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0.09

8 17

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4 19

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24.0

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Eas

tern

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ific

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stria

l Cor

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tion

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3.10

0.

25

8.77

0.

30

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1 0.

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13.9

7 12

. 26

.08.

2011

Pa

n M

alay

sian

Indu

strie

s Be

rhad

0.

045

0.00

07

1.58

* 0.

0043

10

.57

0.00

18

4.17

*

Ave

rage

13.2

6

13.4

4

23.8

5 R

ange

1.58

% to

57.

77%

10

.57%

to 4

8.06

%

4.17

% to

36.

55%

Ave

rage

(All)

18.7

2

22.7

1

27.9

3

16.0

1.20

12

PRO

TON

5.

50

0.15

2.

80

0.62

12

.70

1.16

26

.73

Not

es:

(a)

The

cond

ition

al ta

ke-o

ver o

ffers

tran

sact

ions

refe

rs to

the

offe

rs w

here

ther

e w

as a

n ac

cept

ance

con

ditio

ns o

r req

uire

s th

e ap

prov

al fr

om c

erta

in a

utho

ritie

s.

(b)

The

unco

nditi

onal

take

-ove

r offe

rs tr

ansa

ctio

ns re

fers

to th

e of

fers

whe

re th

ere

was

no

acce

ptan

ce c

ondi

tions

or d

o no

t req

uire

any

app

rova

l fro

m c

erta

in a

utho

ritie

s.

* H

ave

been

exc

lude

d in

the

calc

ulat

ion

of th

e av

erag

e pr

emiu

m a

s th

ey a

re o

utlie

rs. O

utlie

rs a

re d

eter

min

ed b

ased

on

extre

me

devi

atio

n fro

m th

e m

ean

but a

re s

till

rele

vant

for t

ake-

over

s co

mpa

rison

.

(Sou

rce:

Circ

ular

of t

he re

spec

tive

com

pani

es)

35

39

Section 223 of the CMSA, by serving a notice on the Offeror to require the Offeror to acquire his or its Offer Shares on the same terms as set out in this Offer Document or such other terms as may be agreed between the Offeror and such Dissenting Holder of Offer Shares.

(iv) If a Dissenting Holder of Offer Shares invokes the provisions of Section 223 of the CMSA, the Offeror will acquire such Offer Shares in accordance with the provisions of the CMSA, subject to Section 224 of the CMSA. In accordance with Section 224 of the CMSA, when a Dissenting Holder of Offer Shares exercises his or its rights under Section 223 of the CMSA, the court may, on an application made by such Dissenting Holder of Offer Shares or by the Offeror, order that the terms on which the Offeror shall acquire such Offer Shares shall be as the court thinks fit.

Comments We wish to advise that if the Holders are entitled to exercise their rights under Section 223 of the CMSA, such Holders should consult their legal adviser immediately upon the announcement by the Offeror and PROTON.

5.4.3 Potential outcome of the Offer The diagram below illustrates the potential outcome of the Offer on your holdings in PROTON Shares. It is important to take note that your option to dispose of your PROTON Shares in the open market at the prevailing market price is available to you at any point in time until the Closing Date or until such time PROTON Shares are suspended or delisted from the Official List of Bursa Securities:

Notes: (a) Based on the issued and paid-up share capital of PROTON as at the LPD.

(b) Under Chapter 16 of the Listing Requirements, a company may apply for withdrawal of listing subject to, amongst others, majority shareholders in numbers representing 75% in value approving the withdrawal (with not more than 10% shareholders in value objecting) in a general meeting to be convened for this purposes, and a reasonable Exit Offer being made to shareholders. The Offeror, who as at the LPD holds 54.79% of PROTON Shares, can vote in the general meeting.

The Offeror may continue to acquire PROTON

Shares but not on more favourable terms than this Offer within the six

months immediately after the close of this Offer.

Holders who have not accepted the Offer may by notice to the Offeror,

require the Offeror to acquire their shares

and the Offeror shall be bound to acquire those shares on the terms of this Offer or such terms

as may be agreed pursuant to Section 223 of the CMSA

The Offeror will compulsorily acquire any remaining Offer

Shares for which acceptances have not

been received

In the event PROTON fails to comply with the

public shareholding spread requirements pursuant to the Offer,

the Offeror will procure PROTON to withdraw its listing status from

Bursa Securities

>50% ≤75% >75% <90% ≥90% <95% ≥95%

50% 75% 90% 95% 100%

Representing 50.01% PROTON Shares already owned by the Offeror together with 90% of the Offer Shares.

(a) (a) (a)

(b)

39

46

Comments Based on the above, we noted that despite the challenging global economic outlook, the Malaysian automotive industry is still expected to generate a growth rate of 2.5% in terms of TIV of total vehicles in 2012 as forecasted by MAA. The Malaysian automotive industry is also expected to be supported by strong consumer confidence and pent-up demand from the previous year’s supply shocks caused by the natural disasters in Japan and Thailand. As such, the production of passenger vehicles is expected to increase. In relation to the NAP, we note that the Offeror’s rationale to strengthen PROTON’s operations in terms of localisation and vendor development and to safeguard the PROTON Group while at the same time encourage, facilitate, grow and enhance Malaysia’s national automotive industry, hence making Malaysia a preferred automotive hub is in line with the measures as announced in respect of PROTON under the review of the NAP undertaken by the Malaysian Government in 2009. On the other hand, the liberalisation of the barriers to trade pursuant to the Malaysian Government’s commitment under ASEAN and the World Trade Organisation (WTO) in respect of the reduction and/or removal of import duties may impact the performance of existing local automotive companies due to the stronger presence of other international players with potentially cheaper imported automotive vehicles. It is also noted that the sentiments of potential motor vehicles buyers in Malaysia may be affected by any further adverse developments in the global economy whereby potential buyers may decide to defer the purchase of new motor vehicles. Further, any measures by Bank Negara Malaysia to tighten the availability of consumer financing such as hire purchase loans for motor vehicles in Malaysia due to concerns over the economy may also affect the demand for motor vehicles, hence resulting in marginal increases in motor vehicle production. In light of the above, in order for automotive industry players to remain competitive, exploring possibilities for mergers and acquisitions and forming strategic alliances with other carmakers represents a logical step forward.


46

47

5.6.3 Future prospects of the PROTON Group PROTON is an investment holding company. PROTON, through its subsidiaries, manufactures, assembles and sells motor vehicles and related products such as accessories, spare parts and other components. PROTON’s business activities span throughout the whole automotive value chain encompassing vehicle engineering, R&D, manufacturing, distribution, sales, after-sales services as well as financing. Presently, the PROTON Group’s portfolio of models includes the Saga, Satria Neo, Gen 2, Persona, Exora, Inspira and the new model Prevé. Also in the PROTON Group’s portfolio is the world-renowned Lotus sportscar brand, with models such as the Elise, Exige and Evora. Based on the latest audited consolidated financial statements for the FYE 31 March 2011 of the PROTON Group, the revenue contribution based on the respective segments and geographical location are as follows:

(Source: Annual report of PROTON for the FYE 31 March 2011) Presently, the PROTON Group has three (3) manufacturing locations. The details of the manufacturing locations are as follows:

Location Annual Vehicles

Production Capacity Area Models (units/year) (acre) PROTON Shah Alam, Selangor 200,000 250 Saga

Exora Satria Neo Inspira

Tanjung Malim, Perak 150,000 1,280 Persona

Prevé Group Lotus Hethel, Norwich, England 10,000 145 Elise

Exige Evora

PROTON Manufacturing

(7.36%)

Group Lotus Manufacturing &

Distribution (4.89%)

PROTON Selling & Distribution

(87.75%)

Other Countries (21.19%)

Malaysia(78.81%)

Revenue Contribution by Activities

Revenue Contribution by Geographical Location

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The management of PROTON has presented to us the PROTON Group’s business plan and the business turnaround plan for Group Lotus, details of which are as follows: (i) PROTON plans to produce a range of new models in the next five (5) years.

The development of these new models would be based on common platforms that are expected to enable the PROTON Group to reduce its product development costs and improve quality as well as supply reliability. PROTON also expects to increase its domestic market share from these new models. On the international market, PROTON intends to focus mainly on the ASEAN countries, MENA, China and India as well as its existing markets.

(ii) PROTON Group’s Process and Operational Excellence project (PROPEX) which was launched in February 2010 will continue whereby the management has taken initiatives to reduce cost covering key areas such as component parts, consumables, logistics, inventory and utilities.

(iii) PROTON plans to explore potential strategic collaboration with MMC in two (2) areas namely: development and production of a new series of engine to replace the

current series of CAMPRO engine for its future models and to meet future regulations. The development cost and manufacturing investment of the joint production engine between PROTON and MMC can be shared between both parties based on capacity requirement instead of spending full up-front to develop a new engine on its own; and

consignment production of MMC-brand vehicles at PROTON’s manufacturing plant.

(iv) PROTON plans to set-up a joint-venture company (“JV Co”) in China with

Hawtai Motor Group (“Hawtai”) for product development via joint designing and sharing of development cost. The JV Co will be responsible for component development work and vendor sourcing with the Chinese vendors. This will allow PROTON to tap into competitive cost based vendors in China and explore the potential of cross-supplying components from local Malaysian vendors to China and vice-versa.

(v) PROTON plans to initiate a collaboration with a strategic partner for the contract assembly of vehicles at PROTON's Tanjung Malim manufacturing plant to achieve a turnaround productivity and cost efficiency for the said plant.

(vi) In June 2010, Group Lotus had unveiled its 5-year turnaround business plan, amongst others, to launch five (5) new models from the FYE 2014 onwards. Further, on 15 April 2011, LCL has obtained GBP270 million syndicated loan facilities as part of the fund raising exercise required by Group Lotus to execute and deliver its turnaround business plan for the product development of the new models. As at the LPD, GBP207.25 million has been drawn down by LCL for the above said turnaround business plan.

(Source: Management of PROTON)

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Comments

In arriving at our view in relation to the future prospects of the PROTON Group, we have taken note of the outlook of the Malaysian economy, the challenging global economic growth and the challenges in the automotive industry in general as discussed in Sections 5.6.1 and 5.6.2 of the IAL above. Our views are as follows:

(i) We note that presently PROTON has plans to launch new models to boost PROTON’s domestic and international sales volume and market share. We noted that PROTON’s current primary focus is on the production of vehicles under the B and C class segments1 (namely small to mid-sized cars) and does not have a product range that spans across the different motor vehicle class segments.

PROTON is considered a small player within the global automotive landscape and was ranked 37 out of 47 based on the world motor vehicle production survey by the International Organisation of Motor Vehicles Manufacturers or known as Organisation Internationale des Constructeurs d’Automobiles (“OICA”) for the year 2010. Based on the survey, the total production of cars by PROTON was 172,360 motor vehicles as compared to largest manufacturer Toyota which produced 8,557,351 motor vehicles in 2010. We tabulated below an extract of the world motor vehicle productions by car manufacturers for the year 2010 as compiled by OICA for information purposes:

Ranking Car manufacturer

Country of origin

Brand name

Total production

(units volume)

1 Toyota Motor Corporation

Japan Toyota, Lexus, Scion, Daihatsu, Hino

8,557,351

2 General Motors Company

United States

Buick, Cadillac, Chevrolet, GMC, Holden, Opel, Vauxhall

8,476,192

3 Volkswagen Group Germany Audi, Bentley, Bugatti, Lamborghini, Šcania, SEAT, Skoda, Volkswagen

7,341,065

4 Hyundai Motor Group Korea Hyundai, KIA 5,764,918 5 Ford Motor Company United

States Ford, Lincoln, Troller 4,988,031

: : : :

: : : :

: : : :

: : : :

: : : :

35 Jiangxi Changhe Automobile

China Changhe 190,906

36 Qingling Motors Company Ltd

China Qingling 173,577

37 PROTON Malaysia Proton, Lotus 172,360 38 Hunan Jiangnan

Automobile China Jiangnan 135,648

(Source: www.oica.net)

1 The B and C market segments are terms commonly used in European countries to categorize the

vehicles by the size of their platform. Other terms used for B-segment cars are small car, supermini or subcompact. The current example of B-segment car under PROTON Group is the Saga model. The C-segment cars are referred to in other markets as medium car, compact car or small family car. The current example of C-segment car under the PROTON Group is the Persona model.

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PROTON is also mainly domestic focused in the past where approximately 79% of sales are generated in Malaysia. We also observed that the Malaysian automotive market is smaller compared to certain other ASEAN countries such as Thailand and Indonesia, particularly in view of the population base of Malaysia. The TIV for Malaysia in the year 2011 was approximately 600,000 motor vehicles as compared to Indonesia of approximately 890,000 motor vehicles and Thailand of 800,000 motor vehicles. With the MAA projecting a relatively flat TIV estimate for 2012 of 615,000 motor vehicles, we expect the immediate prospects for PROTON to be challenging notwithstanding that the new model named PROTON Prevé is expected to generate demand for PROTON vehicles in 2012. We also expect competition to be very high for the B and C cars segment where PROTON is going to compete, as the other larger players namely the Japanese, Korean and European brands will also be releasing new competing models in the short to medium term. Further, with the increasing efforts by European brands such as Peugeot and Volkswagen to further penetrate into the Malaysian market with the local assembly of selected models in Malaysia, particularly B and C class segment vehicles, we expect that Malaysian consumers will have a greater choice of vehicles in terms of brands, technology, specifications and affordability.

It is observed that PROTON has in the past benefited from a level of protectionism by way of import tariffs imposed on non-national make car models and this has allowed the prices of PROTON vehicles to remain attractive and affordable for the mass car buying market compared to other brands. PROTON has also in the past years faced the challenges having to independently develop and manufacture attractive and modern new models that are able to compete against other brands in the market. Although PROTON has partially addressed this by the development of the CAMPRO engine and the introduction of self-developed models such as WAJA, Gen2, Persona and Exora, the expected cost for the development of new engines, platforms and models in the future would imply that it is not feasible for PROTON to pursue such development independently. This financial constraint will also mean that PROTON is not able to have a representative range of models across the entire class segments. For example, PROTON currently does not have a replacement for the D segment Perdana model as the cost of developing a new model is not viable in view of the expected volume of sales for a D segment car is low in Malaysia. We take note that PROTON has its own Key Performance Index (“KPI”) which represents the main corporate targets set by PROTON. These headline KPIs are targets or aspirations set by PROTON as a transparent performance management practice. The details of the KPI for the FYE 2011 are as follows: FYE 31 March 2011 Target Actual

Domestic Market Share - Passenger Vehicle Segment (%)

33.0 29.3

Contribution of Export Sales to Revenue (%) 8.4 8.9 Revenue Growth (%) 20.0 9.03 Customer Satisfaction Index (x/1,000 points) 720 699 We take note of the actual KPI for the FYE 2011 above and we wish to highlight that there is no assurance that the plan to launch new models by the PROTON Group will increase its domestic and international sales volume and market share given the continuous introduction of new brands and models by its competitors in the automotive market.

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(ii) We noted the PROTON Group’s efforts to explore the potential strategic collaboration and joint venture business arrangement from its business plan. We wish to the highlight that in the past, the potential collaboration with strategic partners such as PSA Peugeot Citroen, Nissan Motors Co. Ltd., Volkswagen AG and General Motors did not materialise. Notwithstanding this, we noted from PROTON’s announcement dated 5 December 2008 that PROTON had entered into product collaboration program with MMC for the development of a new vehicle model. This product collaboration has been successful which lead to the creation of Inspira model. Based on the above, it is also important to take note that there is no assurance that the existing PROTON’s business plans in relation to the potential strategic collaboration may materialise.

(iii) We noted the business turnaround plan for Group Lotus highlighted above. We have also noted that the reclassification of the abovesaid borrowings as highlighted in Section 5.2.5 of this IAL. In this regard, we are of the view that moving forward, the business of the PROTON Group may face challenging times due to the substantial investment required for Group Lotus’ five (5) year turnaround business plan. These investments are for, amongst others, product development, branding, R&D activities and facilities upgrade in order to improve its financial performance. Despite the marketing, branding, R&D activities and facility upgrades, Group Lotus has yet to contribute positively to the PROTON Group as these are long term measures. The successful implementation of the business plan to turnaround Group Lotus is also expected to be a major challenge for PROTON given that Group Lotus’ vehicles are competing in the high performance car segment where brand recognition and motor racing heritage are considered to be part of the essential elements for successful market penetration as potential buyers will also expect extremely high level of performance, technology, design and luxury in their vehicles. The proposed range of new vehicles of Group Lotus will also need to effectively compete against vehicles from specialist performance car manufacturers with proven historical track record such as Ferrari, Lamborghini and Porsche and also against the large global car manufacturers such as Mercedes Benz, Bayerische Motoren Werke AG (“BMW”), Audi AG and Nissan Motor Co Ltd who currently also produce high performance cars within their existing stable of cars in competition with Group Lotus. In this regard, moving forward, the PROTON Group will require substantial funding in order to support Group Lotus in implementing its business plans over the next 5 years given the high level of competition in this segment of the automotive market which may further erode the profitability of the PROTON Group in the future.

We take note that the business plan above as formulated by PROTON seeks to address certain key fundamental areas essential for the long term sustainability of PROTON’s automotive business such as the introduction of a reasonably extensive product range that will have buyer appeal across a range of markets both domestically and abroad, measures to lower the development cost of new engines and left-hand drive models and as well as penetrating into potential larger markets in MENA, India and China. We have also observed the following developments relating to motor vehicle manufacturers in the global automotive industry: (i) in view of the high cost of product and engine development, many

manufacturers have undertaken cost sharing initiatives either internally within the group, for example engine, platform and component sharing for the motor vehicle brands under the Volkswagen group namely Volkswagen, Audi and SEAT (a brand name owned by SEAT S.A. (a Spanish company formerly

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known as Sociedad Española de Automóviles de Turismo, a subsidiary company of Volkswagen) or by alliances (for example engine sharing for Peugeot and Citroen, Nissan and Renault vehicles);

(ii) in view of the challenges of remaining competitive and viable within the global

automotive industry, over the past years, smaller car manufacturers have been acquired by larger automotive groups for example Volvo by Geely Automobile of China, Jaguar and Land Rover by TATA Motor Ltd of India whilst some smaller manufacturers have closed operations, for example SAAB;

(iii) the global automotive sector is subject to fairly rapid technological changes

and many advanced technologies that were initially developed by the larger car manufacturers for higher end models have over time been introduced in mass market volume models as well. Recent developments include: more sophisticated transmission systems (for example dual clutch

gearboxes and more advanced automatic gearboxes that provided faster and smoother gear change times and improved fuel economy);

lighter and more versatile chassis/platform components that can be used

to develop a variety of different model sizes, lower capacity engines with forced induction that provide greater power

and fuel efficiency and reduced emission levels; fuel efficient diesel or hybrid engines; and higher level of safety and driver aid equipment. These technological advances have been made available and will be enhanced over time in various models including models that will compete directly with PROTON car models. We note that PROTON’s access to certain of the above technological advances is limited at this juncture in view of the substantial cost and resources required to develop or acquire such technologies and this may impact on the ability of PROTON to offer an attractive enough range of vehicles to entice new buyers both domestically and abroad.

(iv) Apart from focusing on increasing the volume of traditional car models, we also observe that several manufacturers have also successfully identified niche product segments to generate greater sales such as introducing variants of existing models (for example the MINI coupe, SUV and Estate) and new niche models such as Range Rover EVOQUE, a coupe/SUV concept.

While we recognise that the business plans may address some of the key concerns and challenges facing PROTON, there are risk factors in the successful implementation of these business plans given the uncertainties of acceptance of the PROTON Group's proposed new models in Malaysia as well as in the global markets given the advancements similarly achieved by the PROTON Group's competitors in terms of their product improvement as well the successful closure of negotiations on the proposed joint ventures intended to manage development costs.

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Given the challenging immediate year prospects for PROTON in light of the relatively flat Malaysian automotive market projected for the year 2012 and the uncertainties facing the PROTON Group in the mid to long term against the backdrop of the dynamics of the global automotive sector, the outlook for the PROTON Group is expected to be challenging whereby there will be a need for the PROTON Group to continuously review its performance and strategies to remain competitive in the automotive sector. Notwithstanding the above, we also note that the Offeror who has relevant knowledge and experience in certain aspects of the automotive industry over the years will assist the PROTON Group to strengthen its operations, manufacturing system and distribution network in the regional market. The Offeror is also expected to share with PROTON the relevant technical know-how in the automotive industry gained from its past dealings experience with other global automotive partners to enhance PROTON’s system and procedures. Nevertheless, we wish to highlight that under Section 7 of the Offer Document, the Offeror presently has no plan to make any major change in the structure of the PROTON Group, dispose or re-deploy the fixed assets of the PROTON Group. Any specific intention or plan in relation to these matters can only be formulated after the completion of the Offer and after the Offeror has conducted a detailed review of, amongst others, the financial position and operations of the PROTON Group, including the business transformation plan for the Lotus Group International Limited and its group of companies.

6. FURTHER INFORMATION You are advised to refer to the Appendices for further information on PROTON, the Offeror and other relevant information.

7. CONCLUSION AND RECOMMENDATION The advice of AFFIN Investment contained in this letter is addressed to the Holders of the Offer Shares at large and not to any particular Holder. As such, in providing this advice, we have not taken into consideration any specific investment objectives of any individual Holder or any specific group to Holders. We recommend that any individual Holder or any specific group of Holders who may require advice in the context of their objectives, financial situation and particular needs should consult their respective professional advisers immediately. We have assessed and evaluated the terms of the Offer and have set out our evaluation in Section 5 of this IAL. You should consider carefully the merits and demerits of the Offer based on all relevant and pertinent factors including those set out below and other considerations as set out in this IAC and the Offer Document. In arriving at our conclusion and recommendation, we have considered the fairness and reasonableness of the Offer based on all relevant and pertinent factors including those which are set out above. Below are the summarised pertinent factors which you should consider carefully prior to making a decision whether to accept or reject the Offer.

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Fairness of the Offer (i) Market prices of PROTON Shares

AFFIN Investment noted that PROTON Shares had generally traded at a discount to the Offer Price for the past one (1) year up to the Last Trading Date. The Offer Price represents a premium ranging from 2.80% to 26.73% over the five (5)-day, one (1)-month and three (3)-month VWAMP of PROTON Shares up to and as at the Last Trading Date. The Offer Price represents a premium ranging from 71.34% to 94.35% over the twelve (12)-month, six (6)-month, three (3)-month, one (1)-month, five (5)-day VWAMP and the last transacted price of PROTON Shares up to and as at the Event Date. In this regard, the Offer Price is fair when compared against the historical share market prices of PROTON Shares during the period under review.

(ii) Performance of PROTON Shares’ price against the FBMKLCI The price of PROTON Shares has generally recorded a lower return in terms of dividend income and share price appreciation for the Holders as compared to the FBMKLCI for the period from 13 January 2011 (being the date 1-year prior to the Last Trading Date) up to the Event Date. However, in December 2011 up to the Last Trading Date, PROTON Shares’ price has recorded a higher return in terms of dividend and share price appreciation as compared to an investment made in the FBMKLCI for the said period. Notwithstanding the above which is due to the speculative interest in PROTON Shares arising from the news articles in November 2011 on a possible impending take-over of PROTON, we take note that based on the performance of the market prices of PROTON Shares against the FBMKLCI from 13 January 2011 (being the date 1-year prior to the Event Date) up to the Event Date, an investment in PROTON Shares would have generated a higher loss in terms of dividend income and share price appreciation as compared to the losses from investing in FBMKLCI, which demonstrate that PROTON Shares have been generally underperforming vis-à-vis the FBMKLCI over the period under review. In this regard, Holders may consider accepting the Offer.

(iii) Trading liquidity It is noted that the analysis of the historical trading volume and the percentage free float of PROTON Shares would suggest that the trading of PROTON Shares was at a simple average monthly volume of approximately 10.79 million PROTON Shares or 5.68% of the free float of PROTON Shares for the period commencing from December 2010 up to November 2011, being the month of the Event Date. However, from November 2011 up to January 2012, the trading volume of PROTON Shares per month has increased substantially which is believed to reflect the speculative interest by investors in PROTON Shares following the release of news articles by the media in November 2011 and December 2011 on a possible impending take-over of PROTON.

(iv) PBR analysis Historically, the market has in the past one (1) year up to the Last Trading Date and Event Date valued PROTON Shares lower than the Offer Price based on the traded PBR. The Offer PBR of 0.56 times based on the NA per PROTON Share as at 31 March 2011 falls below the range of the PBR of the Comparable Companies of 0.78 times to 1.89 times and also falls below the average PBR of the Comparable Companies of 1.40 times. In this regard, PROTON is undervalued as compared to the Comparable Companies from the perspective of PBR analysis. However, we noted

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that PROTON has recorded a lower ROA and ROE for the FYE 31 March 2011 as compared to the Comparable Companies.

(v) PER analysis

Historically, the market has in the past one (1) year up to the Last Trading Date, valued PROTON Shares higher than the Offer Price based on the traded PER. The Offer PER of 19.41 times based on the EPS of PROTON for the FYE 31 March 2011 is above the trailing PER range of the Comparable Companies of 6.84 times to 17.28 times and is also above the average PER of the Comparable Companies of 11.94 times. This indicates that the Offer Price is fair as compared to the average trading PER of the Comparable Companies.

(vi) PROTON’s dividend track record and Dividend Discount Analysis We noted that the dividend yield of PROTON for the FYE 31 March 2011 of 2.82% is lower than the dividend yield of the FBM100 Index of 3.35% over the past 12 months. Nevertheless, we take note that the average dividend yield of PROTON for the past three (3) years of 3.41% falls within the range of the Comparable Companies of between 2.70% to 3.95%. However, when compared to the prevailing fixed deposit rate offered by a Malaysian financial institution that is available to PROTON shareholders, it is not attractive for PROTON’s shareholders to retain PROTON Shares for dividend income purposes. Notwithstanding the illustration above, Holders should take note that PROTON’s dividend yield may not be directly comparable to the rate of return from a bank fixed deposit account due to the different risk profiles and the fact that there may be capital gains from any appreciation in the market price of PROTON Shares that may be derived by Holders. Further, the Offer Price of RM5.50 is above the implied equity value of RM4.94 per PROTON Share based on the Dividend Discount Analysis valuation model.

Reasonableness of the Offer (i) Financial performance of the PROTON Group

We noted the financial performance of the PROTON Group over the past five (5) financial years as highlighted in Section 5.2.1 of this IAL. It is noted that it would be beneficial for the Holders to accept the Offer as the PROTON Group may be faced with external challenges in the future as set out in Section 5.6.3 of this IAL as well as the risk of the PROTON Group’s plans not being able to fully address these challenges.

(ii) Rationale of the Offer It is noted that given DRB-HICOM’s knowledge and experience in the automotive industry over the years, DRB-HICOM is expected to enhance PROTON’s system and procedures from its technical know-how in the automotive industry and its experience with other global automotive partners. In addition, the business synergies and opportunities for DRB-HICOM and PROTON can be expanded through the localisation and local vendor programmes. The intention of DRB-HICOM to safeguard the PROTON Group can be evidenced from the intention of its future plans as set out in Section 7 of the Offer Document. Notably, pursuant to the SSPA, DRB-HICOM had provided its covenants and undertakings that it will not engage in plans involving any disposal of assets of the PROTON Group which will result in a significant change in the business direction or policy of PROTON which includes the manufacture, assembly and sales of motor vehicles and related products, or constitutes a Major Disposal (as defined under Paragraph 10.02 (eA), Part B, Chapter 10 of the Listing Requirements) within 2 years from the completion date of the Acquisition.

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The Offer also provides an opportunity for the Holders to realise their investment in PROTON Shares for cash at the Offer Price, which is not less than the highest price paid by the Offeror for PROTON Shares during the 6 months period prior to the beginning of the Offer Period.

(iii) After taking into consideration of the following: the outlook of the Malaysian economy;

the challenging global economic outlook;

the prospects of the automotive industry in Malaysia; and

the future prospects of the PROTON Group, AFFIN Investment is of the view that the business of the PROTON Group may be facing challenging times ahead and the future financial performance of the PROTON Group hinges on the ability of the PROTON Group to successfully implement its 5-year business plan and 5-year Group Lotus turnaround business plan. The Offeror may conduct a detailed review of these business plans after the completion of the Offer and these business plans may be subject to changes. Should these business plans not be successfully implemented, the financial position and operations of the PROTON Group may be adversely affected in the future.

Based on AFFIN Investment’s evaluation on the quantitative aspects of the Offer in terms of the market prices of PROTON Shares, the performance of PROTON Shares against the FBMKLCI, the trading liquidity of PROTON Shares, the PER analysis and PROTON’s dividend track record as well as the equity value of PROTON Shares under the Dividend Discount Analysis valuation model, AFFIN Investment is of the view that the Offer is FAIR. AFFIN Investment wishes to highlight that the PBR analysis should not be the primary method to assess the valuation of PROTON Shares given that the assets based method may not provide a representative valuation of PROTON in light of the capacity utilisation of PROTON’s manufacturing facilities and the ROA analysis. In addition, AFFIN Investment is of the view that the Offer is REASONABLE based on the evaluation of other factors, amongst others, the financial performance of the PROTON Group, the rationale of the Offer, the outlook of the Malaysian and global economy, the future prospects of the PROTON Group in light of the dynamics of the global automotive sector and also taking into consideration that there have been no alternative offers received to date. Accordingly, AFFIN Investment wishes to advise and recommend the Holders to ACCEPT the Offer. Yours faithfully, For and on behalf of AFFIN INVESTMENT BANK BERHAD JOHAN HASHIM A. HISHAM MD HASHIM Head Senior Vice President Corporate Finance Corporate Finance

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PROTON HOLDINGS BERHAD - ChartNexusir.chartnexus.com/proton/website_HTML/attachments/... · proton holdings berhad. contents v page executive summary vi part a letter from the board